Join 924 investors who get actionable, evidenced-based wealth management insights delivered directly to their inbox.
Subscribe

The Worst Financial Advice to Give a College Grad

I think just about the worst financial advice you can give to a recent college graduate is: “Buy stocks in companies whose products and services you like.”

On the surface, advice to “buy what you know” is well-intentioned. After all, saving and investing early and often helps a young investor harness the amazing power of compounding.

How amazing? Let’s use an example. Suppose a young person, Logan, starts saving $5,000 a year for retirement at age 25, continues to save that amount each year until age 65 and earns 7% annual returns. Logan will end up with a $1 million nest egg. Let’s say Logan waits until age 45 to start saving for retirement. Logan will need to save nearly $25,000 a year to end up with that same $1 million, or will have to generate an annual rate of return north of 20% (a figure that would put Logan on par with Warren Buffett, but not a statistically likely event, to put it mildly). So, mathematically, the advice to save early on, and to have a significant portion–if not all–of your retirement savings in equities, is correct.

Read the rest of the article on The Wall Street Journal.

 

We want to hear from you!

Montgomery

866.676.2701
info@jt-am.com
200 Commerce Street
Suite 300
Montgomery, AL 36104
Map

Dothan

334.793.7001
info@jt-am.com
304 Jamestown Boulevard
Dothan, AL 36301
Map

Receive Our Newsletter

Close